Buffett bets $1 on unemployment below 8 percent by Election Day 2012

What’s $1 to someone worth an estimated $47 billion? Although those aren’t exactly high stakes for Berkshire Hathaway CEO Warren Buffett, he has an interesting gamble with a former Obama official on the economy. However, it’s Buffett that’s betting on economic improvement.

In an appearance on CNBC’s “Squawk Box” on Thursday, Buffett was asked by show co-host Becky Quick where he saw the economy going, particularly the unemployment rate which is hovering above 9 percent.

“The jobs report that we’ll get tomorrow from the government has not shown the growth needed,” Quick said. “And I think the number that went around yesterday was that was that you would need 217,000 jobs created every month between now and the election in order to get that number below 8 ½ or 8 percent unemployment rate. How likely do you think it is that when we get to the election next year we’ll be looking at unemployment below 8 percent?”

Buffett explained he thinks unemployment will be down, which he based on the notion that the housing picture will improve.

“I’ve got a bet with a fellow that it will be,” Buffett said. “And he’s a very smart fellow, so he — if you asked any economist who you should bet on they would bet on the other fellow. But I’ve got — I’ve got a bet with a fellow that — it’s only for $1 — I’ve got a bet with him that it’ll be below that figure. But I — that’s because I think housing will come back before that. If I’m wrong about housing, I lose the bet.”

The “fellow”: the Obama administration’s former Director of the Office of Management and Budget Peter Orszag, who apparently doesn’t have a lot of confidence in his former boss’ ability to turn around the economy by the time of the next election.

QUICK: OK. So he thinks it’s going to be above 8 percent, you think it’s going to be below?
BUFFETT: Well, I didn’t give you the exact figure.
QUICK: OK.
BUFFETT: But the figure that we used is one below 8 percent.
QUICK: OK.
BUFFETT: It’s quite a bit below 8 percent. He’s a — he’s probably a favorite to win now, but if we get the bounce in housing I think we will get — but I could well be wrong on timing on that. I won’t be wrong about whether it happens.